Student Loan Interest Rankles College Grads

theodp writes "Like many recent college grads, Steven Lee finds himself unemployed in one of the roughest job markets in decades and saddled with a big pile of debt — he owes about $84,000 in student loans for undergrad and grad school. But what's really got Lee angry are the high interest rates on his government-backed student loans. 'The rate for a 30-year mortgage is around 5%,' Lee said. 'Why should anyone have to pay 8.5%? The government has bailed out homeowners. It's bailed out big businesses. Why can't it also help students?' Not only that, federal student loans are the only loans in the nation that are largely non-dischargeable in bankruptcy, have no statutes of limitations, and can't be refinanced after consolidation, so Lee can forget about pulling a move out of the GM playbook. And unlike mortgages on million-dollar vacation homes, student loans have very limited tax deductability. A spokeswoman for the Department of Education blamed Congress for the rates which she conceded 'may seem high today,' but suggested that students are a credit-unworthy lot who should thank their lucky stars that rates aren't 12% or higher. Makes one long for the good-old-days of 3% student loans, doesn't it?"

Comments

All mine were cheap!

[dieman]

Direct loans were cheap, and the consolidation brought them down to ~5% afair. I know the new loans are not as cheap, but thats because some idiot decided having non-direct loans and promising a profit to everyone who serviced them. Doh!

Re:All mine were cheap!

[EdIII]

He does bring up an interesting point though, admittedly in a stupid and ignorant way.

Why isn't education free? It's sure as hell free right up to a high school diploma, so why not free after that?? Government subsidizes some enormously unimportant and stupid shit and don't even get me started on the bail outs. Too late...

I'm sure his post can be seen as ignorant but it DOES create a question in many people's minds why Wall Street, the supposed bastion of white elitism, get's a bailout while the rest of America does not? I have yet to see any benefit from it. Other than the few in the service industries receiving large ridiculous payments for lavish "gloating" parties.

So why don't we just clawback 90% of their pay, it's not like that would not leave them with multiple times the average American salary, and use that to forgive all student loans?

Where is the *real* bailout for the American people?

I understand capitalism and the supposed free market (fuck-it, it DOES NOT EXIST) but why does it have to be labeled as socialism and pinko-communism to have the idea that education should be one of the few things that is supported solely by the government? Why does free education always have to be instantly equated to unpaid teachers and staff?

We are going to turn into a 3rd world country without education reform in our lifetimes. Part of that reform must be a federal education budget, that cannot be withheld from the states under any circumstances, and appropriately funded college educations. I am also definitely for removing high school and changing it to a trade school/college prep 5 year time period. Trade school does not have to a bad thing either. How about seriously training some of our young people for once? Paying local businesses, which can include IT firms, to take on young apprentices and actually give 5 years of subsidized real world experience. Operating tech/trade labs where young people can get hands on training in contemporary technology used in the field? Maybe instead of having a high school diploma we could just have certifications instead. Meaningful Certifications too, not worthless MCSE's. That's not a troll either, all of the MCSE's I have met have been near worthless and the ones that are not will candidly tell you how much they needed to learn outside of the certification to survive and get their jobs done.

I am sure that a lot of people could tear this post to shreds, but you know what? Education is not working right now and the only thing we seem to be able to do is to churn out young people by the thousands that have no real skills and start out saddled with debt at unreasonable rates that cannot be erased.

P.S - I would gladly pay a 5% tax rate on all good, services, and income if I KNEW it went straight into the education system in a way that it could not be diverted to anything else like SS has been in the past. At some point I might be retired and will have to rely on all those stupid young people for 20-40 years not to fuck things up too much till I die. The last thing I want to be is 75 in a grocery store being told by a 19 year old that they can't give me change because the machine is, "like all broke or something", while the cash tray is open and all they have to do is reach in and grab it. Oh wait... that was last week. Of course there are the good days too. When another young person get's handed a 100 dollar bill to pay for something and I get handed back 160 dollars as change. Of course I sweetly pointed out that she should check her math again and she blushed and said thank you. I wish I was kidding about those two incidents. Sadly I am not.

Re:All mine were cheap!

[MinistryOfTruthiness]

Higher education isn't free for several reasons.

First, kids don't value free stuff, but they'll take it anyway. University is already "13th grade" to many people, and by telling kids that they can shirk responsibility and stay in high school as long as they want without paying for it is just crazy. Who wouldn't want to live the college life as long as possible? It's certainly a lot less stressful than "the real world." The only thing saving college from the unmitigated mediocrity of high school is the fact that they know they'll eventually pay for this lifestyle (or their parents are on their case because *they're* already paying for it.)

Second, it isn't required for survival. Many people get along just fine without college degrees, and indeed, don't need them in their day to day lives.

Third, it increases the number of people staying because of the Mom and Dad factor. I'm of the opinion that even the upper grades of *high school* are a waste on a significant number of people, because they simply don't care and are only there because they "have to be." Yes, they could theoretically drop out at 16, but Mom and Dad won't hear of it because they're convinced that little Johnny is throwing away his opportunity to become President one day. The fact that Johnny harbors an *active disdain* for the idea of school and learning in general doesn't ever seem to sink in.

The fact that people pay for University and take on a certain amount of risk means that people have to *think about it* before going or sending their kids. Do they really want to do it? Are they willing to put in the work necessary? How long are they willing to pay for it? Maybe in other countries the culture is different, but I fear in America, the disdain for learning that I observed during my time, and continue to observe in kids today, guarantees that government funding of higher education will be nothing more than another money sink with no tangible benefit. Scholarships, grants, and tuition assistance exist for a reason. Let them pick the people who are qualified for the privilege.

Restating the problem

[Space cowboy]

The problem is one of treating education as a business like any other. The country obtains a benefit from having an educated citizenry, and allowing education of this type to be treated as just another profit-center is at best short-sighted, at worst actively hostile to the country's best interests. From this basic problem, everything else flows.

I'm from the UK, and just recently I've been reflecting on the things that I took for granted in the UK that are pay-for over here in the USA. Don't get me wrong, I love living here, I've just married an USAsian who's simply wonderful, but there are things I miss...

Primarily of course, is universal healthcare. The NHS is so far and away better than the situation we have here in the US that it's just not funny. Leaving that argument aside, the other major thing is education. My new wife and I were thinking about where any future offspring might be educated...

If the USA stays the same course as it's currently on, I think my children (as UK citizens by birthright) may be going to the UK for their education. It's a lot cheaper, it'll broaden their minds by travelling, and the quality is generally very high.

Oh how things have changed. I no longer think of the USA as being the gold-standard of higher education. Now I think of it as being just a way of transferring money from rich people to educated people.

As it happens, my wife paid off her student loans (for a JD/MBA) this evening (well, they'll settle on Tuesday). For the cost she just paid, we could buy a small house in the UK. The only debt higher is our mortgage, and living in a nice house in a nice part of the Bay area, that's expected.

I didn't pay for my education (although these days if you don't go to Scotland you pay something in the UK - it's a *lot* less than over here in the US though). I gave the UK about 10 years of higher taxes as a result - probably less than they were expecting - but moved to the USA for the nicer weather :)

Simon.